Federal Parent PLUS Loan
The Federal Direct Parent PLUS Loan Program is designed for parents of dependent students to help pay for the costs of education. This is a non-need based loan and has a fixed interest rate. Parents are required to have a good credit history to qualify for this loan. Dependent students whose parents have applied for but were unable to get a Federal Parent PLUS Loan are eligible to receive additional Direct Unsubsidized loan funds.
The Federal Parent PLUS Loan does not have an aggregate borrowing limit; however, the annual borrowing limit equals to the cost of attendance minus other financial aid awarded to a student. The loan is typically disbursed twice during an academic year.
The repayment period on Federal Parent PLUS loans starts 60 days after the loan is fully disbursed. For loans first disbursed after July 1, 2008, parents may choose to defer payments on a Federal Parent PLUS loan until six months after the date the student ceases to be enrolled half-time. They may also chose to pay accruing interest monthly or quarterly, or allow the interest to be capitalized quarterly.
Interest Rates and Fees
The interest rate on newly disbursed Federal Parent PLUS Loans is fixed at 7.9%. There is an origination fee of 4%.
*Due to the sequester there are changes to the origination fees. Effective March 1st, 2013 the origination fee will increase to 4.2%. This affects all PLUS loans where the first disbursement occurs after March 1st*
To be considered for the Federal Parent PLUS Loan program, students must file FAFSA and have Federal Parent PLUS loan listed on their Financial Aid Award.